The last year has seen a flurry of initial public offerings and listing by hotel chains based in India when over the last decade such listings have been few and far between.
Recent listings include Juniper Hotels, SAMHI Hotels, Apeejay Surrendra Park Hotels, Ventive Hospitality and ITC Hotels.
In the IPO pipeline are some of India’s biggest hotel firms, including Brigade Hotel Ventures and potentially the largest flotation in Schloss Bangalore, the parent company of Leela Palaces, Hotels & Resorts. Backing some of the moves are North American real estate investment trusts such as Blackstone and Brookfield. In 2024, the National Stock Index of India launched the Nifty India Tourism Index, a vehicle to provide more sophistication and benchmarking to the sector and a wider pool of potential investors.
“Indian hospitality is at a critical growth juncture. Historically, most Indian hotel chains relied on private equity or debt funding for their expansion, but as the industry grows, the need for diverse funding options has become evident. IPOs allow hotel chains to tap into a larger capital pool without over-leveraging,” said Nandivardhan Jain, CEO at business consultancy Noesis Capital Advisors.
Ashish Jakhanwala, managing director and chairman at owner-operator SAMHI Hotels, which went public in September 2023, added that “the capital market in India has matured in the last decade or so. In the past, hotel companies were not of a scale that appealed to the public markets, and there was a lack of institutional capital.”
Jakhanwala said India's hotel industry has begun the maturation process relatively quickly.
“Hotel companies have started scaling up, and there is now adequate institutional funding for the sector. You will therefore continue to see the growth of public equity in the Indian hotel space,” he said.
Nifty moves
Juniper Hotels Chief Financial Officer Tarun Jaitly said the primary driver of its 2024 IPO was to raise growth capital.
“The entire raise was from fresh offerings, and none of the promoters sold any shares at the IPO as they stand committed for long-term growth of the company,” he said. “As the company achieves its stated growth targets of doubling its owned key count in the next three years, the growth in revenue and profit should lead to shareholder value accretion.”
The recent stock exchange boom and the success of several IPOs in diverse sector has pushed the momentum, Jain said.
“The Indian stock market has seen significant momentum over the last two years, with the Nifty50 returning nearly 17% [compound annual growth rate] from 2021 to 2024, making it an ideal time to secure favorable valuations,” he said.
Chalet Hotels, whose 2019 IPO was priced at a valuation of 75 billion Indian rupees ($862.6 million), viewed its IPO as a vehicle to provide substantial liquidity for expansion and debt repayment.
But today, IPOs of Indian companies are viewed not just as a financial necessity but as an enabler of long-term scalability, governance and transparency, which are all critical elements allowing firms to thrive in a competitive environment.
Juniper Hotels’ Jaitly said his firm is a joint venture between Saraf Hotel Enterprises, a hotel developer with a strong and well-established track record of more than 40 years, and Hyatt Hotels Corp., itself listed on the New York Stock Exchange.
Between 2012 and 2018, Juniper added one new hotel asset to its portfolio every year, he said.
“Post the company’s consolidation phase between 2019 and 2023, including more than two years of the COVID-19 pandemic, we have embarked on a new growth phase driven by strong sectoral tailwinds. Hence, we decided to raise growth capital from Indian capital markets through an IPO,” Jaitly said.
SAMHI Hotels’ Jakhanwala said he started his firm with “high-quality institutional capital … [but] post-COVID, we felt the need to recapitalize the company. It had by then reached an inflection point where it could transform into a public company to access permanent capital for growth and create value in the long term. This was our reasoning for going to the public rather than engaging in a new round of private equity.”
All to good use
Newly flushed with public capital, Indian hotels are putting funds to good use.
“Juniper raised [18 billion rupees] in its IPO. The company paid down [15 billion rupees] of high-cost debt and kept aside [the rest] for general corporate purposes, including acquisitions. Post the deleveraging, Juniper has significantly strengthened its balance sheet with a net bank debt to earnings before interest, taxes, depreciation and amortization of only 1.5-times,” Jaitly said.
He added a strong balance sheet combined with healthy free cash-flow generation has provided Juniper Hotels the dry powder it needs to grow through potential acquisitions and the development of latent growth opportunities in the various land parcels owned by the company.
The IPO has created a platform for Juniper Hotels to double the number of owned hotel rooms in the next three years, Jaitly said. As a first step, the company acquired a 220-room upper-upscale hotel in Bengaluru, its debut in one of the fastest-growing metropolitan markets in India.
What these now-public hotel companies in India do next depends on their investment strategies, Jain said.
“The deployment of funds varies by company, but the overarching trend is clear, which is growth. Some hotel chains are focusing on increasing their presence in underpenetrated tier-2 and tier-3 cities where competition in branded [hotel] space is very limited. Some of them are using the proceeds to expand their portfolios only in deep markets like key metros,” Jain said. “Sustainability is another area of focus, with funds being channeled into energy-efficient renovations and green building certifications. At the same time, companies are prioritizing debt reduction to strengthen their balance sheets and reduce financial risk.”
For its part, SAMHI wants to use its new public-company status to address its debt, Jakhanwala said.
“For SAMHI, proceeds from IPO allowed us capital to pare down debt. This resulted in free cash from operations being available for growth,” Jakhanwala said. “In October, we acquired an underperforming hotel in Bangalore, which we will add more rooms to. One will be branded under the Tribute by Marriott collection, and the other will be a Westin. Furthermore, we have acquired an office building on a long-term lease in Hyderabad and will be converting it into a W by Marriott hotel. This along with strong same-store growth and repositioning of some of our existing hotels has set us on the path of strong growth for the next few years.”
IPOs have been a necessary next step in the evolution of the Indian hotel industry, Jain said.
“In a capital-intensive industry like hospitality, going public is not just about cashing out — it’s about creating a war chest for the next phase of growth. Listing allows [these hotel firms] to align strategies with global trends while delivering consistent shareholder returns,” he said.